Hong Kong shares have ended 0.70 per cent higher on bargain-buying after tumbling on Monday on fears of a conflict between Russia and Ukraine.
The benchmark Hang Seng Index added 156.96 points to close Tuesday at 22,657.63 on turnover of HK$63.80 billion ($A9.25 billion).
While global markets remain on edge over the stand-off in Eastern Europe, analysts said there was a broad view the worst of the crisis may have already passed.
World shares tumbled on Monday after Russia's parliament voted at the weekend to allow President Vladimir Putin to send troops into Crimea, a mainly Russian-speaking peninsula in the southeast of the ex-Soviet state.
The move was met with world condemnation and warnings of possible political and economic isolation, with Washington and the European Union saying they were looking at a range of sanctions.
David Baran, co-head of Symphony Financial Partners, a Tokyo-based hedge fund, told Dow Jones Newswires: "The Russian-Ukraine standoff may drag on, but a military confrontation with the West is likely well out of the question.
"The economic stakes of the crisis are not that great for the rest of the world, either."
The index surged in afternoon trade after Interfax news agency said troops in Russia had been ordered back to their bases, easing fears of an escalating conflict, although gains eased in the afternoon.
Internet firm Tencent rose 1.74 per cent to HK$612.50, energy giant Sinopec added 2.07 per cent to HK$6.89 and HSBC was 0.56 per cent stronger at HK$81.50.
Chinese shares closed down 0.18 per cent ahead of the opening of the annual session of the national legislature as investors grew worried about the domestic economy.
The benchmark Shanghai Composite Index slipped 3.77 points to 2,071.47 on turnover of 101.1 billion yuan ($A18.54 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.28 per cent, or 3.06 points, to 1,106.35 on turnover of 138.6 billion yuan.
Profit-takers added to the downward pressure on the index after four straight gains, including a rise of almost one per cent on Monday.
Also on Tuesday, liquidity fears returned after the central bank drained 85 billion yuan from the financial system as it tries to reduce the risk of bad debts among lenders.
Eyes are on China's annual National People's Congress, which opens on Wednesday - the first under the new leadership of Xi Jinping - with investors hoping for fresh economic policies as growth shows signs of slowing.
"The annual meetings may offer investors more clues about reforms in state-owned enterprises and medical sector, which could curb the downside in the market," Guo Feng, chief investment adviser with Northeast Securities, told Dow Jones Newswires.
However, worries over the health of the domestic economy intensified after official data released on Saturday showed China's purchasing managers' index (PMI) sank to an eight-month low of 50.2 in February.
On Tuesday, the central bank drained 85 billion yuan from the financial system through repurchase agreements, one of its tools for its regular open market operations, raising concerns about liquidity.
Environmental shares fell on profit-taking. Tianjin Capital Environmental Protection Group lost 2.71 per cent to 9.33 yuan and Fujian Longking dropped 2.70 per cent to 33.48 yuan.
Cement producers dropped on reports authorities will cut capacity in the sector. Xishui Strong Year retreated 1.88 per cent to 9.42 yuan and Anhui Conch Cement shed 1.21 per cent to 14.71 yuan.
But property developers strengthened, with Gemdale Corp. adding 2.8 per cent to yuan 6.19.
